What is the Roth IRA 5-year rule?

The Roth IRA 5-year rule requires that your Roth IRA account be at least 5 years old before you can withdraw earnings tax-free and penalty-free. The clock starts on January 1 of the tax year for which you made your first Roth IRA contribution. For example, if you first contributed in April 2026 for the 2025 tax year, your 5-year clock started January 1, 2025.

Does the 5-year rule apply to Roth IRA contributions?

No. The 5-year rule only applies to Roth IRA earnings, not contributions. You can withdraw your Roth IRA contributions (the money you put in) at any time, at any age, without taxes or penalties — even if the account is less than 5 years old. Only the investment growth (earnings) is subject to the 5-year rule.

Is there a separate 5-year rule for Roth conversions?

Yes. Each Roth conversion has its own 5-year holding period for the purpose of avoiding the 10% early withdrawal penalty on the converted amount. This is separate from the 5-year rule for earnings. If you are under 59½ and withdraw converted funds within 5 years of the conversion, a 10% penalty applies (though no additional income tax, since taxes were paid at conversion).

Does the 5-year rule apply if I am over 59½?

If you are 59½ or older, the 5-year rule still applies to earnings, but only for the tax-free requirement — not the penalty. Once you are 59½, there is no early withdrawal penalty on Roth earnings regardless of account age. However, to withdraw earnings completely tax-free, the account must still be at least 5 years old.

Roth IRA 5-Year Rule 2026 — What It Is and How It Works

The Roth IRA 5-year rule is one of the most misunderstood rules in retirement planning. Get it wrong and you could owe taxes and a 10% penalty on a withdrawal you thought was free. The rule exists in two distinct forms — one for earnings and one for conversions — and they work differently.

The short version: your contributions can always be withdrawn tax-free and penalty-free. Only your investment earnings are subject to the 5-year rule.

The Two Roth IRA 5-Year Rules

There are actually two separate 5-year rules:

Rule	What it covers	Purpose
Rule 1 — Earnings	Roth IRA earnings (investment gains)	Must be met for withdrawals to be tax-free
Rule 2 — Conversions	Money converted from traditional IRA/401k to Roth	Avoids 10% early withdrawal penalty on converted principal

Rule 1: The 5-Year Rule for Roth IRA Earnings

To withdraw Roth IRA earnings completely tax-free and penalty-free, two conditions must both be met:

The Roth IRA must be at least 5 years old
You must be age 59½ or older (or meet another qualifying exception)

When does the 5-year clock start?

The clock begins on January 1 of the tax year for which you made your first Roth IRA contribution. This is important:

If you open a Roth IRA and make your 2026 contribution in December 2026, the clock started January 1, 2026
If you open a Roth IRA and make your 2026 contribution in April 2026 for the 2025 tax year, the clock started January 1, 2025 — one year earlier

Key detail: The 5-year clock is per person, not per account. If you open a second Roth IRA at a different broker in 2030, you don’t start a new 5-year clock — the clock from your first ever Roth IRA contribution applies.

What Happens if You Withdraw Earnings Early?

If you withdraw earnings before the 5-year rule is met and you are under 59½:

Income tax applies to the earnings
10% early withdrawal penalty applies

If the 5-year rule is met but you are under 59½:

Income tax applies to earnings
10% penalty applies unless a qualifying exception applies (disability, first-time home purchase up to $10,000, etc.)

If you are 59½ or older but the 5-year rule is NOT met:

Income tax applies to earnings
No 10% penalty (you’re past 59½)

Ordering Rules for Roth IRA Withdrawals

The IRS has specific ordering rules for which money comes out of a Roth IRA first:

Contributions (first out — always tax-free and penalty-free)
Converted amounts (in order of conversion year — penalty may apply if under 59½ and within 5 years of conversion)
Earnings (last out — subject to the 5-year rule)

This means most Roth IRA owners can withdraw their contributions without triggering any tax or penalty before they need to worry about the 5-year rule.

Rule 2: The 5-Year Rule for Roth Conversions

When you convert money from a traditional IRA or 401(k) to a Roth IRA, the converted amount has its own 5-year clock for penalty purposes only.

If you are under 59½ and withdraw converted Roth IRA funds within 5 years of the conversion:

10% early withdrawal penalty applies (even though you already paid income tax on the conversion)
No additional income tax (you paid taxes at conversion)

Each conversion has its own 5-year clock. A 2023 conversion has a clock that expires January 1, 2028. A 2025 conversion expires January 1, 2030. They are tracked separately.

This rule does NOT apply once you reach age 59½. After 59½, you can withdraw converted Roth IRA funds without the 10% penalty regardless of how long they’ve been in the account.

Worked Example: Roth IRA 5-Year Rule in Practice

Sarah, age 32, opened her first Roth IRA on March 15, 2023 with a 2022 contribution.

Her 5-year clock started January 1, 2022
Her 5-year rule on earnings is met January 1, 2027

By January 2027, Sarah can withdraw her earnings without worrying about the 5-year rule — though she’s still under 59½, so she’d owe the 10% penalty on earnings unless a qualifying exception applies.

Michael, age 58, did a Roth conversion in 2024. He plans to retire at 61.

His 5-year clock for the conversion started January 1, 2024
The conversion 5-year rule expires January 1, 2029
Michael turns 59½ in 2026 — so the conversion penalty rule no longer applies to him at 59½
Once 59½, Michael can withdraw his converted funds without the 10% penalty

The Inherited Roth IRA 5-Year Rule

If you inherit a Roth IRA, different rules apply:

If the original owner had met the 5-year rule, you inherit a “qualified” Roth IRA and distributions are tax-free
If the original owner had NOT yet met the 5-year rule, the clock continues — you must wait until the original account would have been 5 years old

As a non-spouse beneficiary of a Roth IRA, under the SECURE 2.0 Act, you must generally distribute all assets within 10 years of the original owner’s death.

Common Mistakes to Avoid

Thinking each Roth IRA account has its own 5-year clock — the clock is per taxpayer, not per account
Confusing contributions with earnings — contributions are always available without penalty
Forgetting the conversion 5-year rule — particularly important for people under 59½ doing Roth conversions
Starting the clock at account opening — the clock starts January 1 of the contribution year, which can be earlier than your actual contribution date if you contribute for a prior tax year

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Bottom Line

The Roth IRA 5-year rule applies to earnings, not contributions. Your contributions can be withdrawn tax-free and penalty-free at any time. To withdraw earnings tax-free, your account must be at least 5 years old AND you must be 59½ or older. A separate 5-year rule applies to each Roth conversion for penalty purposes if you are under 59½. Understanding these rules helps you plan withdrawals strategically — especially for early retirees doing Roth conversion ladders.

This article is for educational purposes only and does not constitute personalised tax advice. Consult a tax professional for guidance specific to your situation.

Written by WealthVieu

WealthVieu researches and writes data-driven personal finance guides using primary sources including the IRS, Bureau of Labor Statistics, Federal Reserve, and Census Bureau.

The content on Wealthvieu is for informational purposes only and should not be considered financial, tax, or investment advice. Consult a qualified professional before making financial decisions. Full disclaimer · Editorial policy